Temasek-backed crypto shop Amber halts expansion plans in rocky market

Amber Group has raised just half of a planned $100mn funding round and halted expansion plans as the Temasek-backed crypto group fights concerns that it will be pulled into the market turmoil sparked by the collapse of FTX.

Crypto traders this week became nervous over the outlook for Amber after industry analysts raised concerns about how the failure of FTX affected the trading shop.

The group, which has also been backed by Sequoia China and Tiger Global Management, lends out tokens and handles customers’ trades on crypto markets. Formed by former Morgan Stanley traders, it has established high-profile sponsorships with football clubs Chelsea and Atlético Madrid through its WhaleFin trading app.

The failure of Sam Bankman-Fried’s FTX exchange and Alameda Research, his trading firm, is sending shockwaves across the industry, with investors worried contagion will spread and engulf other companies.

While Amber said it had no exposure to Alameda, it was an active trader on FTX and had experienced delays in getting its withdrawals processed. In recent weeks it has also laid off staff, although it has declined to confirm a total.

The firm’s troubles have come to light in the days that followed the death of 30-year-old co-founder Tiantian Kullander, a former Morgan Stanley trader, on November 23.

Amber’s Hong Kong office was thinly staffed when the Financial Times visited on Thursday. On top of a cabinet stood arrangements of wilting white flowers, the colour of mourning in Chinese culture.

In an interview on Thursday at the group’s Singapore headquarters, managing partner Annabelle Huang said there was “no disruption to daily operations” and rebutted the reports from analysts and media as “predatory and misinformed”.

Amber said it had raised about $50mn in funding from a new sovereign fund, with the deal to be announced in January. The new capital values the company at $3bn (S$4bn), flat compared with February and a long way from the $10bn it hoped to raise at the beginning of the year.

“I wouldn’t say it [the funding round] was unsuccessful,” Huang said. “We are not under pressure to raise capital.” The crypto finance firm would also announce a major acquisition of a licensed business in Singapore later in December, she added.

Huang said less than 10 per cent of its trading capital was stuck on FTX but the company admitted the market’s “fluid dynamic” meant it would focus on institutional clients in Asia. Plans to expand in Europe and the US have been put on ice while projects such as a new metaverse platform are being “deprioritised”, it added. The company also confirmed it was making “ongoing headcount and team composition adjustments”.

Crypto-focused hedge fund managers said they believed Amber FTX took a significant hit on FTX as well as the collapse of popular crypto token Luna earlier this year. “We all know that Amber got burnt pretty hard especially on FTX,” one manager said. Amber has previously co-invested in crypto companies alongside Alameda Research, the fund linked to FTX.

Earlier this week Web3 analysis provider Lookonchain said there had been recent large transfers from Amber to outside accounts and that the group had assets of just $9.46mn, based on a review of public blockchain records. Huang said much of its business took place in private.

One employee who said he worked for Amber Group in Shenzhen, a technology hub in southern China, said he lost his job as part of a round of lay-offs in November, which he estimated saw about 60 employees lose work across Shenzhen, Beijing and Shanghai.

The staffer, who declined to be identified, said the company had been laying off staff since June and remaining employees had been told to work from home from December 1 as the company had terminated its office leases.

Staff, including the employee, are still waiting to be fully paid a severance payment promised for December 5 but were told there was “a banking issue”. “We will take legal action to safeguard our rights,” the employee said.

Huang said the problem came from foreign exchange conversion issue ahead of Chinese new year, which is six weeks away.

Media reports said Amber had closed offices in China but Huang said Amber had no entities in China, and developers building its platform were hired through a third party. A number of employees on Maimai, China’s version of LinkedIn, list Amber Group as their employer, however. Cryptocurrency transactions are banned inside the mainland.